Embracing Cross-Selling to Grow the Bank-Brokerage Business

Guest Commentary by Scott Stathis, Managing Director and COO, BISRA (formerly Kehrer-LIMRA)

Bio: Scott G. Stathis has been in financial services since 1992. Scott joined forces with Dr. Kenneth Kehrer in 2008 and is currently the Managing Director and COO of Kehrer- LIMRA, a performance research and consulting organization focused on financial institutions. His early background in the industry includes new broker training, sales automation, and financial planning systems. His more recent experience includes 12 years running his own financial services technology consulting and research company, as well as being president of a financial planning software company.
Scott’s experience and insights have established him as a reliable source of information related to productivity in the financial services industry. He moderates ten industry roundtables each year, his articles are published regularly, and he is a frequent speaker at industry gatherings.

Over the past three to five years, we’ve begun to see the bank channel’s fractured approach to providing wealth management offerings evolve from “lip service” to more of a formal strategy. Banks have realized that having a wealth management offering is not just a value-add, but is a necessity in order to remain competitive in today’s marketplace. To achieve a truly integrated wealth management offering, firms need to leverage cross-departmental selling as a way to retain existing clients and to gain new customers.

Although certain roadblocks still exist – such as the innate silos of the banking institutions – it is possible to build a model that delivers a truly unified experience.

Deconstructing the Silos

If financial institutions are still operating in “silos of distrust” they will never be able to provide truly integrated offerings and customers will take their assets elsewhere.  Most electronic brokerage firms, such as Fidelity and Schwab, have posed threats to the regional banks with their sophisticated, integrated but primarily online and call center offerings. Bank have a competitive advantage at the higher end of the market considering the extent of personal service they can offer, but given that silos still exist in many of the banking institutions, transferring information to clients amongst various sectors can by extremely difficult and creates challenges related to providing a seamless integrated offering to wealth clients.

Clients are not only in need of information from multiple departments within their wealth management provider, but they are now expecting it as they demand more control over their investments. “The reason we got into online investing is that some of our clients thought it was important,” noted Bill Benjamin, president of U.S. Bancorp Investments, in a recent Forbes article. “All of our clients want to be able to access information, research and trading.” We’ve seen this trend continue to develop and specifically, U.S. Bank has increased its online offering and is leveraging Scivantage’s technology for its web-based online investment platform. The reverse is also happening and online brokerages are launching banking offerings to meet client demands.

Cultural and informational silos create a fragmented offering, hindering different arms of the bank to interact and limiting cross-sale revenue growth. Cross-departmental, education is a key piece of the puzzle when it comes to creating a unified offering, and employees can learn from one another through planned cross-departmental interactions and presentations. Once each department appreciates and trusts the value proposition of the other amazing things start happening!

One way to break down these walls is to have each department critical to the integrated wealth management offering create a “value proposition roadshow presentation” that they present to each of the other departments. The goal is to create an environment which appreciates teamwork, enhances trust across departmental boarders, and encourages an integrated approach thereby enhancing the client experience. Sophisticated technology can also obviously help facilitate this dynamic. For example, an online brokerage is a profitable asset for banks and brokerages, and can also be leveraged for attracting new business – both within existing clients and new users. In fact, according to a recent Aite Group research report, 44% of Gen-X and Gen-Y investors surveyed shifted assets to another investment firm or switched investment providers due to availability of online tools.

Developing Best Practices to Maximize Profits

Although many banks follow their own unique strategies, there are some common themes that are evolving which we hear about when having discussions with program leaders at leading banks. We’ve seen a focus on increasing the accuracy of client segmentation and the mapping of cost effective tiered levels of services to each segment.

Inbound requests used to go directly to an advisor. Now inquiries may be vetted by a licensed platform rep, through the call center, or even via the online channel, thus leaving advisors to focus on the higher-net worth segments.

Additional strategies banks should consider include:

–  Building a reliable, efficient, and institutionalized customer profiling system that enables the institution to place clients in the correct segments in the first place.
–   Increase profitability by focusing on optimizing the cost-effectiveness of each delivery channel mapped to each client segment.
–   Leverage a technology platform that allows the bank to deliver consolidated financial information to clients which enhances the customer experience.
–  Measure the success of your integrated wealth management offerings by tracking and measuring the referral intensity between departments involved in the wealth management offerings.

An Integrated Future

The most commonly identified driver for banks who are currently focusing on providing robust online investments operations remains client retention, according to a recent Celent report. An integrated wealth management strategy that includes online offerings is imperative, as it will increase client retention, draw in new business, and position the bank as a full-service firm able to meet and exceed customers’ wealth management and banking expectations.

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